FINANCIAL INSTITUTIONS

[Filed December 18, 2018, 8:27 a.m.]

Preproposal statement of inquiry was filed as WSR 18-01-067.

Title of Rule and Other Identifying Information: The securities division proposes to amend WAC 460-16A-205. The amendments would adopt amended North American Securities Administrators Association (NASAA) statements of policy, adopt the new statement of policy regarding electronic offering documents and electronic signatures, and repeal the adoption of the statement of policy regarding health care facility offerings. The proposed amendments are ministerial updates that do not constitute material changes from existing law or policy.

Hearing Location(s): On January 23, 2019, at 10:00 a.m., at the Department of Financial Institutions (DFI), 150 Israel Road S.W., Tumwater, WA 98501.

Date of Intended Adoption: January 24, 2019.

Submit Written Comments to: Nathan Quigley, P.O. Box 9033, Olympia, WA 98507, email Nathan.Quigley@dfi.wa.gov, fax 360-704-6463, by January 22, 2019.

Assistance for Persons with Disabilities: Contact Carolyn Hawkey, phone 360-902-8760, fax 360-902-0524, TTY 360-664-8126, email Carolyn.Hawkey@dfi.wa.gov, by January 22, 2019.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The securities division proposes to amend WAC 460-16A-205 in order to adopt the latest versions of previously adopted NASAA statements of policy, adopt a new statement of policy, and repeal the adoption of an obsolete statement of policy. The proposal would make the following changes:

Reasons Supporting Proposal: The amendments will provide clarity for securities issuers and counsel by identifying the current versions of these policies and maintain uniformity among the states applying the NASAA statements of policy.


•	Adopt updated versions of the following statements of policy: Corporate securities definitions; loans and other material transactions; preferred stock; promoters' equity investment; specificity in use of proceed; underwriting and selling expenses, underwriter's warrants and selling security holders; unsound financial condition; voting rights, registration of asset-backed securities; registration of commodity pool programs; registration of equipment programs; and registration of oil and gas programs;
•	Adopt the new statement of policy regarding use of electronic offering documents and electronic signatures (the division applied the standards set forth in this policy prior to the policy's promulgation); and
•	Repeal the adoption of the statement of policy regarding healthcare facility offerings, which was repealed by NASAA when it became obsolete as a result of the fact that health care facility offerings are now structured as municipal bonds and exemptions from registration apply.

Statutory Authority for Adoption: RCW 21.20.450.

Statute Being Implemented: Chapter 21.20 RCW.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: [DFI], governmental.

Name of Agency Personnel Responsible for Drafting: Nathan Quigley, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760; Implementation: Faith Anderson, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760; and Enforcement: William Beatty, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760.

A school district fiscal impact statement is not required under RCW 28A.305.135.

A cost-benefit analysis is not required under RCW 34.05.328. DFI is not one of the agencies listed in RCW 34.05.328.

The proposed rule does not impose more-than-minor costs on businesses. Following is a summary of the agency's analysis showing how costs were calculated. The proposed amendments are ministerial updates that do not constitute material changes from existing law or policy.

AMENDATORY SECTION(Amending WSR 11-13-036, filed 6/8/11, effective 7/9/11)

WAC 460-16A-205Adoption of NASAA statements of policy.

(1) In order to promote uniform regulation, the administrator adopts the following North American Securities Administrators Association (NASAA) statements of policy for offerings registering pursuant to RCW 21.20.180 or 21.20.210:

(a) Registration of publicly offered cattle feeding programs, as adopted September 17, 1980;

(b) Registration of commodity pool programs, as adopted with amendments through May ((7, 2007))6, 2012;

(d) Registration of oil and gas programs, as adopted with amendments through May ((7, 2007))6, 2012;

(e) Real estate investment trusts, as adopted with amendments through May 7, 2007;

(f) Real estate programs, as adopted with amendments through May 7, 2007;

(g) Loans and other material affiliated transactions, as adopted with amendments through ((March 31, 2008))May 6, 2018;

(h) Options and warrants, as adopted with amendments through March 31, 2008;

(i) Registration of direct participation programs - omnibus guidelines, as adopted with amendments through May 7, 2007;

(j) Mortgage program guidelines, as adopted with amendments through May 7, 2007;

(k) Church bonds, as adopted April 14, 2002;

(l) ((Health care facility offerings, pertaining to the offering of nonprofit health care facility bonds, as adopted April 5, 1985;

(m))) Corporate securities definitions, as adopted with amendments through ((March 31, 2008))May 6, 2018;

(((n)))(m) Impoundment of proceeds, as adopted with amendments through March 31, 2008;

(((o)))(n) Preferred stock, as adopted with amendments through ((March 31, 2008))September 11, 2016;

(((p)))(o) Promotional shares, as adopted with amendments through March 31, 2008, except that the term promotional shares shall be limited to those equity securities which were issued within the last three years and that all promotional shares in excess of twenty-five percent of the shares to be outstanding upon completion of the offering may be required to be deposited in escrow absent adequate justification that escrow of such shares is not in the public interest and not necessary for the protection of investors;

(((q)))(p) Registration of asset-backed securities, as adopted with amendments through ((May 7, 2007))May 6, 2012, except for offerings registering or required to register pursuant to chapter 460-33A WAC or RCW 21.20.705 through 21.20.855;

(((r)))(q) Promoters' equity investment, as adopted with amendments through ((March 31, 2008))September 11, 2016;

(((s)))(r) Specificity in use of proceeds, as adopted with amendments through ((March 31, 2008))September 11, 2016;

(((t)))(s) Underwriting expenses, underwriter's warrants, selling expenses, and selling security holders, as adopted with amendments through ((March 31, 2008))May 6, 2018;

(((u)))(t) Unsound financial condition, as adopted with amendments through ((March 31, 2008))May 6, 2018;

(((v)))(u) Unequal voting rights, as adopted with amendments through ((March 31, 2008))September 11, 2016;

(((w)))(v) Guidelines for general obligation financing by religious denominations, as adopted April 17, 1994;

(((x)))(w) Risk disclosure guidelines, as adopted September 9, 2001;

(((y)))(x) Church extension fund securities, as adopted with amendments through April 18, 2004; and

(((z)))(y) Guidelines for cover legends, as adopted October 2, 2004.

(z) Electronic offering documents and electronic signatures, as adopted May 8, 2017.

(2) An offering registering pursuant to RCW 21.20.180 or 21.20.210 that falls within one or more of the statements of policy listed in subsection (1) of this section must comply with the requirements of said statement of policy or policies.

(3) The statements of policy referred to in subsection (1) of this section are found in CCH NASAA Reports published by Commerce Clearing House. Copies are also available at the office of the securities administrator.